SEC Drafting Rule Requiring Firms Reveal Board Diversity

Dave Michaels, Wall Street Journal, June 27, 2016

Investors should have more information about how many minorities and women serve on corporate boards, and regulators must intervene to require fuller disclosure, the country’s top securities regulator said Monday.

Securities and Exchange Commission Chairman Mary Jo White said her agency would propose a rule to elicit more information about the diversity of board members. Ms. White, speaking to a conference in San Francisco, said the SEC’s current rules have failed to draw out meaningful information, while the share of minority directors for the largest public companies has “stagnated” at 15% for the past several years.

It is unclear, however, whether Ms. White can succeed in getting such a rule enacted before her she leaves her post, which she is widely expected to do before the next president takes office early next year. The agency has struggled to complete the long list of rules already on its agenda, including many required by Congress.

Ms. White raised the prospect of changing the rules on diversity disclosures in a speech earlier this year, and Monday’s remarks suggest she is increasingly determined to make the issue a priority.

“The low level of board diversity in the United States is unacceptable,” Ms. White told the International Corporate Governance Network via videoconference. “Our lens of board diversity disclosure needs to be refocused in order to better serve and inform investors.”

Ms. White didn’t specify what information the SEC would require, but praised companies that have voluntarily reported the “state of the board’s gender, race and ethnic diversity composition.” {snip}

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